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IN the eighteenth century the power of the British ruling class was as yet untempered by constant responsibility to the opinion of the nation. In the army and navy, prize-money and the spoils of war had whetted the appetites of an island people never slow to seize their chances of enrichment by plunder or trade.

But a communistic system, such as they had to administer in early Sydney, demands, at least of its responsible chiefs, self-sacrifice and devotion to the common welfare. Its success depends upon the discovery of a successor to the patriarchs of old. He must apportion the pooled resources of the community in such fashion that each member of it may be moved, not by calculation, but by the primitive impulses of loyalty or fear, to do what in the sum of their efforts will suffice for the needs of all. Aboard ship, especially when tiny sailing ships ventured over wide oceans, a sense of common danger from tempest or lee shore might maintain this solidarity. Ashore, in a far land with a seemingly genial climate, the discipline of a little commune made up of the worst possible human materials went all to pieces. Such men as Grose and Paterson, and even Hunter and King, though they applied with a zeal that grew more ferocious with failure "the peculiar caste rules of the services", proved as unequal as Bligh at Tahiti to the changed demands on the sea-captain turned patriarch.

They and their fellow-officers were "for the most part simple, commonplace men, physically courageous and intellectually vapid, men guided by a strange jumble of uncomprehended motives—blind loyalty to the King, their regiment or ship—blind acceptance of the Church of England—mingled with love of liquor, greed of gain and indifference to the usual tenets of morality. Few were men of striking ability or forceful character, for the colonial garrisons, a backwater of the Services and the retired list, had little to show in those times of war in the way of brains or energy".* Probably not one of those called to fill Governor Phillip's place saw that the conversion of a prison camp into a free community was a sociological riddle of some complexity. Each was beset by his social equals for relaxations and concessions. Each was tormented by Whitehall's intermittent tugging on the financial reins. Each reached the breaking strain and returned home broken by failure. Yet for the most part their superiors remained as blind as they to the changed and changing realities in New South Wales.

[* Dr Marion Phillips, A Colonial Autocracy, p. 10.]

To Phillip's civil officials, Surgeon Arndell and the Reverend R. Johnson, the changes which Lieutenant-Governor Grose made as soon as "the Governor's" back was turned seemed a deliberate plunge into anarchy. The civil court ceased to sit. Public agriculture was dropped. Phillip's admirable plans for the town of Sydney were ignored. The officers were granted land wherever they chose—land which soon included the former scenes of public agriculture. Public order collapsed and a general licentiousness raged unrebuked.

Grose and McArthur, on the other hand, reported a new energy and prosperity. In February 1793 the former, as Lieutenant-Governor, wrote of "the great spirit" with which the officers to whom he had granted land were clearing it "at their own expense. Whether their efforts result from the novelty of the business or the advantages they promise themselves I cannot say, but their exertions are really astonishing . . . I shall be prepared and thankful to receive as many convicts as can conveniently be sent." He thought the "settlers from convicts" an improvident crew, but he encouraged them to bring maize to the commissariat store by offering for it a fixed price of five shillings a bushel, "it being at the same time a cheap purchase for government and an accommodating market for the settler".*

[* Grose to Dundas, 3 September 1793, H.R. of A. series I, vol. X, p. 448.]

McArthur thought the changes since the departure of Governor Phillip "so great and extraordinary that to recite them all might create some suspicion of their truth". They had in a short time lifted the settlement from "a state of desponding poverty and threatened famine . . . As for myself I have a farm containing 250 acres, of which upwards of a hundred are under cultivation. I have at this moment 20 acres of fine wheat growing, and 80 acres prepared for Indian corn and potatoes. My stock consists of a horse, two mares, two cows, 130 goats, upwards of a hundred hogs. Poultry of all kinds I have in the greatest abundance. I have received no stock from government but one cow". That to the father of Australian pasture this petty goat and poultry run should seem almost incredible progress makes the "desponding poverty", against which it looked well, dark indeed.

The surgeon and the parson in Sydney reported to Governor Hunter other aspects of the military rule. "Crimes of every sort increased to an alarming degree; thefts and robberies became so numerous that they were spoken of as mere matters of course." ** "Assaults the most outrageous were frequently committed. . . . As no pains were taken to inspire a reverence for religion, the Sabbath, instead of being passed by the people in attendance at divine service, was profaned as a day particularly appropriated to gaming, intoxication, and uncontrolled indulgence of every vicious excess." A drunken convict whom he met on the Parramatta Road offered to break the good Surgeon Arndell's head with a bottle of rum which he had refused to share. When the clergyman failed to finish service in the short half-hour allotted him by military orders, the drum beat and, to his chagrin, out marched both guard and congregation.

[** Arndell to Hunter, H.R. of A. series I, vol. II, p. 183. Cf. Rev. R. Johnson to Hunter, p. 178.]

Agricultural activity and contempt for order, morals and religion flowed, it would seem, from the same tap, that is, from the rum used as a makeshift currency—a strange instrument of progress but one congenial to that strange company. Among the "articles to be sent to New South Wales in consequence of Governor Phillip's representations" the store-ship 'Britannia' had carried in January 1792 "9,278 gallons of rum, being the allowance of half a gallon per annum". Phillip was especially pleased at the inclusion of the convicts "for it is a bounty which many of those people well deserve and to the undeserving it will never be given". He reckoned without his host. Not much longer was his will alone to decide to whom it should be given.

By the same ship came word that recruits for the New South Wales Corps in England had been promised, as a condition of enlisting, "the usual ration except spirits, without deduction from their pay". Dundas thought the same offer made in New South Wales would be "a strong inducement to some of the marines to enlist in the additional company".*** He overlooked the fact that in the communism of semi-starvation guard and convict alike had been given, and had come to regard as their right, a share of whatever was to be had and that the consignment of rum was intended for both. Phillip saw that the soldiers would think little of free rations.**** Everyone drew them. But the deprivation of spirits would put them on a lower plane than the convicts. While he hesitated, and despite his forebodings, Major Grose and his brother-officers chartered the same store-ship, the 'Britannia', to bring a cargo from the Cape which might "relieve the soldiers' necessities" and afford them "Comforts other than the reduced and unwholesome rations served out from the stores". Within a few days of Phillip's departure, moreover, an American ship, curiously named the 'Hope', arrived at Sydney, offering spirits and provisions, which the new Lieutenant-Governor bought, seemingly in fear of drought. He told Dundas that he had the less reluctantly bought spirits as well as provisions, "as it appeared from your letter of the 15th May ***** that it was intended to issue spirits to the non-commissioned officers and private soldiers". Dundas had foreseen that the coming of whalers would necessitate supervision over their usual rum-trading. In a later despatch, oddly dated the 31 June 1793, he warned Grose against allowing spirits to be secretly sold to convicts, and bade him subject the trade to "the view and inspection of proper persons directed by you to attend the same". But private exchange, however well watched, relaxes the commissary's grip upon a communistic economy. The 7597 gallons of rum obtained from the 'Hope' had long since been sold mainly to the only persons Grose was likely to direct as "proper to attend the same", that is to the officers of the Corps. They had quickly organised the bringing of more from Bengal, Batavia, and Rio de Janeiro as well as from Massachusetts, for they were finding it a most acceptable means of hiring labour and buying produce.

[*** Dundas to 10 January 1792, H.R. of A.series I, vol. I, p. 331.]

[**** Phillip to Dundas, 2 October 1792, H.R. of A. series I, vol. I, p. 377.]

[***** Grose to Dundas, 9 January 1793, H.R. of A. series I, vol. I, p. 414. The letter mentioned had arrived only a few days after Phillip wrote his comments on the exclusion of rum from the soldiers' ration.]

The home authorities, thinking an isolated prison would have no use for money, at first provided none. Convicts worked as punishment, and Whitehall paid in England for the freight of the store-ships. What use was there for money? If goods had to be bought from visiting ships or elsewhere, the Governor might draw bills on the Treasury. Things worked out much less simply at Port Jackson. Officers whose pay was due in London could draw bills as well as the Governor. Thus they too could buy goods from whalers and others. What they bought they bartered for labour with which to till or improve the 15,639 acres granted during the three short years of military ascendancy. Much of the labour they obtained at first for nothing from assigned servants victualled at the stores. Later it cost the price of its "keep" when under Hunter and King they were required to pay for such servants' rations. But thereafter they found it expedient to pay wages in "truck", either rum or provisions, to three grades of labour, (a) "government men" working in their own time, (b) assigned servants, and (c) expirees.

Phillip had at first set the convicts to work from sunrise to sunset, as part of their punishment. All did as little as the lax supervision of their fellows would exact. To encourage effort he therefore defined certain tasks as a day's work, and set the convict who had completed his task free to cultivate his garden or to do as he chose. In Phillip's time he seldom chose to work for others. The officers were forced to follow suit and define daily tasks for their assigned servants. Then, to keep control of their servants after the not exacting task was done, they too found it worth while to offer some reward as an inducement to extra work. Expirees were in a position to demand wages for the whole time worked. They had the alternative of applying to government for a settler's grant and for cattle from the public herd with which to make an independent home and start life afresh.

Rum, as Phillip foresaw, proved a much appreciated relief from the store rations. But it was more. So universally acceptable was it that it became a medium of exchange, a commodity for which convicts, whether in the government gangs or assigned, were ready to do extra work. Expirees would take payment in rum; and for rum, too often, settlers bartered their produce. Most who took it were content to consume it themselves. Provident habits were rare. The convicts drew rations from the stores, and expiree settlers did the same until their farms were producing. "Much work", wrote Hunter to Portland, in excusing his tolerance of rum, "will be done by labourers, artificers and others for a small reward in this article . . . which money could not purchase . . . . It is not by an extra allowance of the common slop clothing or the provision issued from the public store that this labour is to be obtained, for those men as well as women who have been some time here, and particularly those whose term is expired and who are disposed to work, aspire to a better kind of dress and are desirous of indulging with their tea and sugar, as well as the gratification of a little tobacco and spirits at times, which whilst thus applied with moderation is certainly not ill employed".*

[* H.R. of A. series I, vol. I, p. 593, Hunter to Portland, August 1796.]

Beyond a doubtful half-gallon per annum, however, the generality could get rum only by working for those who had it to give. So for the twenty years or more that it remained the customary means of paying wages, rum placed the key to wealth in the hands of those who could answer the convicts' insatiable call for it. Grose and his associates, with McArthur playing as ever a leading part, had supplemented Phillip's ship-board communism in necessaries by an exchange economy based on truck wages, with rum as the main item of consumption and motive for exertion. These officers may have known little and cared less about the implications and possible results of what they were doing. Perhaps such a change was inevitable to colonists of a trading race, and trade was in sight as soon as Ruse, the first expiree settler, grew more grain on his little farm than his family could consume. Its evil form, with rum as currency, expressed the neglect of Whitehall to provide a local money and the character of the ruling class who repaired the omission.

In their days of power they laid themselves out to make the best of both worlds—the wages system of England and the rations of her New Holland prison. Explaining to Whitehall that it took time to make land fruitful, Grose allowed the officers, including himself; to draw rations and slops from the public stores for their assigned servants.** The expense soon roused the ire of the Treasury, which was paying for produce twice over—first in the rations used in growing it, and then in the fixed prices for the wheat, maize and meat delivered at the stores. Under pressure from home, and in spite of outcry from the subsidized infant industry, Governors Hunter and King charged the landowners for the rations drawn. Subsidized industries never willingly grow up. Whitehall then tried to set the clock back and to replace all purchase of settlers' produce by direct filling of the stores with grain and meat grown by the convicts on government farms.

[** Dundas had given an implied permission to do this See H.R. of A. series I, vol. I, p. 328.]

The exchange economy, however, inevitably triumphed over communism. It called into play motives of self-interest and hope more continuous and powerful than fear of the government overseer. Using a common third as reward, it gave to all who would make the effort freedom to decide by what service they could gain more of that reward. Expirees and officers might grow grain and produce for the stores or for private sale. Even the convict, apart from the penal chain-gangs, might work for wages. These were paid in "truck" at computed prices,*** and the officers, it is true, made their official privileges a screen for much that was villainy by our standards. Yet, even an exchange economy based upon tyranny and rum offered a freedom to experiment, a career open to talent, unknown in the lethargy of institutional communism.

[*** See the Rev. R. Johnson's statement of the cost of erecting the first church, reproduced in facsimile in vol. I, p. 263, of the Australian Encyclopaedia. Cf. H.R. of A. series I, vol. I, p. 451.]

Even the most selfish feature of the military regime, the assignment of convict servants to cultivators, was a step in advance of their serried degradation in the government gangs. When assigned to cultivators the convicts' services were in legal form lent, not sold. They remained "government men". Beyond question these assigned servants were harshly used.* In 1800 Governor Hunter made the presentation of delinquents before a magistrate the preliminary—for it very rarely proved an obstacle—to their punishment Until then masters had assumed a right to horsewhip them. The effect of the system on the attitude of employers to labour must not be minimized, but there was a germ of economic freedom in the mere facts of trade and of payment of wages by "truck". All the degradation and extortion which accompanied the use of rum could not blot out the dawn, through that sinister method, of the freedom to produce and consume as he chooses which the use of money brings to the individual. A bad money may lead the individual to use that freedom ill, but it may later be replaced by a good money which does not.

[* See Adventures of Ralph Rashleigh, pp. 153 et seq. This book, though the epic quality of some of the adventures makes the element of fiction evident enough, has a value akin to that of the Homeric poems in its vivid portrayal of the customs and setting of old colonial days.]

From the first the new economy put power into the hands of those who rose superior to the evil of the money they used. Elizabeth McArthur's pen-picture of Elizabeth Farm at Parramatta, written shortly after Governor Hunter's arrival, is one of freedom confined to a dominant few.** "For such as have many in their employment it becomes necessary to keep on hand large supplies of such articles as are most needed, for shops there are none. . . . The officers in the colony, with a few others possessed of money or credit in England, unite together and purchase the cargoes of such vessels as repair to this country from various quarters. Two or more are chosen from the number to bargain for the cargo offered for sale, which is then divided amongst them in proportion to the amount of their subscriptions. This arrangement prevents monopoly, and the impositions that would be otherwise practised by the masters of ships."

[** Macarthur Records, p. 51. It is there dated 1 September 1795, but this is a slip. References in it to Macarthur's resignation of his superintendence of government agriculture and to the season of the year make it plain that it was written in 1796.]

As to the market from which they obtained a return for this expenditure on truck, she says, "some thousands of persons are fed from the public stores, all of whom were formerly supplied with flour from England to meet the demand for bread. But since so many individuals have cleared farms they have thereby been enabled to raise a great quantity of grain in the country, which is purchased by the Commissary at 10s. a bushel, and issued for what are termed rations. In payment for which the Commissary issues a receipt, approved of by the Government. These receipts pass current here as coin. When any number have been accumulated in the hands of individuals they are returned to the Commissary, who gives a bill on the Treasury in England for them. These bills amount to thirty or forty thousand pounds annually. How long the Government may continue so expensive a plan it would be difficult to foresee. Pigs are bought upon the same system as would also be sheep and cattle if their numbers would admit of their being killed. Beef might be sold at 4s. if not 5s. the lb. A good horse is worth £140 to £150. Be it ever so bad it never sells for less than £100. From this statement you will perceive that those persons who took early precautions to raise live stock have at present singular advantages."

In Mrs McArthur's description one may detect a sense that the control of the market by the early birds was too good to last. Chafing at the officers' "singular advantages", such as their monopoly of imported goods, the settlers from convicts sought the intervention of Whitehall and of the Governor. A petition addressed in February 1800 by the settlers around Parramatta to the Secretary of State tells how that monopoly weighed upon them. It is the other side of the shield Elizabeth McArthur held up—a picture of "intolerable burdens which have not only cut off all hope of their independence, but reduced them and their families to a state of beggary and want, and incapacitated them from prosecuting the culture of their lands with vigour. . . . The tillage of land in this country", they explain, "is conducted in a different manner from what it is in Europe, the latter with the assistance of horses and oxen, the former wholly by men, who to keep pace with the growing extortion of monopolists and dealers, rise (sic) the price of their labour in proportion to the price of imported commodities. The price of grain being fixt, the poor settlers have no means of avoiding the impositions of the dealer and labourer, but are crushed under the heavy weight of expences attending agriculture, which frequently exceed the amount of their crops. In fact the whole of the very exorbitant profits of trade are extorted from them rather than the consumers of any other description, who in general are indifferent what prices they give for any article as the burden of expences falls on the land holders".***

[*** H.R. of A. series I, vol. II, p. 442. Cf. vol. II, p. 607, Governor King to Portland 28 September 1800.]

The boon which the petitioners sought, as a remedy for all their ills, was a return towards government tutelage, the establishment by the government of "a public warehouse, from which the settlers might be supplied with every necessary article at such a rate as would not only enable them to meet the wishes of His Excellency Governor Hunter in his intended reduction of the price of grain, but also considerably diminish the expences of government by enabling the landholder to support his family, who from mere indigence are now dependent on the public store".

The settlers on the Hawkesbury, from whom were demanded prices even higher than those instanced by the Parramatta petitioners, solved the problem by direct action. They set up stills in the rough country behind Green Hills, and distilled "rum" from their own grain. So busy was the traffic in this "moonshine", sold at first at six shillings a gallon, that a grain shortage threatened.

More than the crooked ways of Sydney streets may thus be traced to the period of military rule. Wage earners under the wing of a benevolent government, traders meeting every increase of wages by exacting higher prices for their wares, a country population between the upper and nether millstones of regulated wages and prices seeking state assistance, but ready to pursue its own interests by the most direct means—all may be descried in the first dawn of exchange in New South Wales.